Gold clings to modest gains, but lacks any strong follow-through

   •  A modest USD retracement helps regain some positive traction.
   •  Bulls seemed largely unaffected by the prevalent risk-on mood.
   •  Fed rate hike expectations keep a lid on any meaningful up-move.

Gold held on to its positive tone through the mid-European session and is currently placed at the top end of its daily trading range, around the $1215 region.

The precious metal managed to find some support ahead of the yearly lows and seemed largely unaffected by a global wave of risk-on trade, as depicted by positive trading sentiment around equity markets. 

Meanwhile, the modest move higher coincides with a downtick in the US Dollar. In absence of any fresh trade-related development/news, the recent USD bullish trend took a brief pause amid some initial signs of stability in the Chinese Yuan and could be the only factor underpinning demand for dollar-denominated commodities - like gold. 

However, expectations about gradual Fed rate hike path, reinforced by a goodish pickup in the US Treasury bond yields, kept a lid on any meaningful up-move and held the non-yielding yellow metal within a four-day-old trading range. 

Moving ahead, this week's important US macro data - the latest consumer inflation figures for the month of July might influence Fed rate hike expectations and eventually provide some fresh directional impetus. 

Technical levels to watch

A follow-through buying interest has the potential to lift the commodity towards $1220-22 supply zone ahead of the next major hurdle near the $1331 region. On the flip side, $1207-06 area seems to protect the immediate downside, which if broken should open the room for an extension of the metal's well-established bearish trend.